The quote from Tyler Cowen seems to suggest that he is "against" bitcoin. But he's merely observing that gold has an industrial value whereas there is no such analogous industrial value for cryptoassets. That does not mean that he's against it, that bitcoin is useless, or that he thinks its in a bubble (cryptoassets could be, he's agnostic). Would he also be for hiring people to dig holes in the ground? At least with hole digging, I can't imagine there are the negative externalities that a "Mole-Ride Plastics" bottle cap farm probably produces. This seems like a problem with government price-fixing, not arbitrageurs. Venezuela is a huge source of bitcoin mining because the government imposes a price ceiling on electricity. What costs us $40 of electricity costs them 6 cents. This article is rank pearl-clutching.Mr. Read, who is also an economics professor, said he would rather sell the city’s supply of cheap power to companies employing large numbers of people. Mold-Rite Plastics, which makes bottle caps, also uses about 10 percent of the city’s power, but it employs about 200 people. The mining companies? “They hire a security guard,” he said. “And a guy who comes when something breaks.”
Colin L. Read, the mayor of Plattsburgh, N.Y., also sees it as a public nuisance. The city was guaranteed a fixed supply of cheap electricity as part of the construction of power-generating dams on the St. Lawrence in the 1950s. Bitcoin mining companies are plugging into that power supply like a swarm of hungry mosquitoes.
I understand the basic problem: those electrical prices were created to foster industrial employment. They are not doing that. I would like to see the fine people of Plattsburgh employed. Bitcoin is not doing that, either. I would imagine it took some wrangling to get those credits and now the people who argued for them look foolish which doesn't help. Governments are less agile than corporations and corporations are less agile than individuals so a dude with a warehouse full of Antminers is gonna win every time. And I can understand the basic problem: cryptographic hashing is not, at the moment, is not an energy-efficient method of security. Or, if you take the perspective that the government and military of the United States provide security of value for our currency, cryptographic hashing isn't good for employment either. But fundamentally? Cryptocurrency is innovation and it's a direct consequence of the current financial structure. Cryptocurrency exists solely because reserve banks tilted the scales such that large corporations stayed solvent while small businesses and individuals got crushed. Cryptocurrency is a symmetrical response to the asymmetry of the financial system. And that's the basic problem here: if you're the city planner for Plattsburgh this shit came out of left field and negates all your holies. If you can't see the opportunities all you see is threats.